Further telecoms consolidation

The $41 billion acquisition of SDL by JDS Uniphase, and the continuing consolidation of the Asian and European telecommunications industry dominated the international world of IT and telecommunications last week.

At home, the third cellular licence saga and the ever-increasing IT industry involvement by Nedcor, stole most of the local headlines.

• we saw satisfactory year-end numbers from the Connection Group (back in the black, but revenue well down on 1999);
• a profit warning from Faritec;
• a change of ownership for the Y3K Group, to Utas Investments, a subsidiary of Eureka Industrial; and
• the resignation of Nic Rossen, CEO of Elexir.

[Local]
[Cautionary]
[Listing]
[Result]

• rumours that Deutsche Telekom and NTT DoCoMo/Hutchison Whampoa were both bidding ($30 billion-plus) for VoiceStream;
• Global Crossing was looking to sell its Web-hosting business to Exodus;
• WorldCom and Sprint have formally called off their merger plans;
• shareholders and board members of Telefonica were trying to oust Juan Villalonga, the CEO of Telefonica; and
• Oracle has ousted SAP as the number one applications vendor in the latest annual Manufacturing Systems Top 100 software list.

[International]

Other international news included:

• the appointments of Peter Gyenes as CEO of Informix, Richard Laird as president and CEO of Infinitec Networks, Patrick Martin as the chairman, president and CEO of Storage Technology and Vivek Ragavan as CEO of Redback Networks;
• the resignations of Jean-Yves Dexmier, CEO of Informix and Michael Simmons, president and CEO of PowerCerv;
• the announcement of job losses from Deutsche Telekom, Pervasive Software, PowerCerv and Sync Research.

We saw excellent figures from Actuate, Altera, Applied Micro Circuits, ESI, EXFO Electro-Optical Engineering, Infosys, Juniper Networks (back in the black), Mercury Interactive, Pace Micro Technology, Powerwave Technologies, Sawtek, Tollgrade Comms, Vitesse Semiconductor and Yahoo!

Losses came from Acuma, Ariba, Broadbase Software, C-bridge Internet Solutions, CTI Group, Dataware, Equinox, Exabyte, Geac, Gadzoox Networks, Interactive Intelligence, InterVoice-Brite, Ixos Software, MCMS, NDC Automation, Networks North, Numerical Technologies, Oryx Technology, Redback Networks, Sonus Networks, Stamps.com, TMSSequoia, Webvan Group and Xceed.

Despite overseas IT and telecoms stocks performing quite well, the local situation is far from healthy.

Paul Booth, columnist, ITWeb

Good numbers were recorded by Dallas Semiconductor, Elantec Semiconductor, Excel Technology, Gateway, Microchip Technology, Motorola, Paradyne Networks (back in the black), PMC-Sierra, Rational Software, RSA Security, Tessco Technology and Three-Five Systems.

Satisfactory results were posted by Electronics For Imaging, Exponent, FileNET, First Data, Iomega (back in the black), Saturn Solutions and Teleflex.

Mediocre returns came from Butler International, Diagonal, GartnerGroup, Office Depot, Seagate Technology and VISX.

Very poor results came from Computer Research, Rogue Wave Software and Troy Group.

Other financial news included profit warnings from Aspect Comms, Auspex Systems, Centura Software, Continuus Software, DCS Group, Eagle Point Software, Extended Systems, Geac, Landmark Systems, Lynx Group, MTI Technology, Open Market, Pinnacle Systems, Policy Master Group, PowerCerv, SCO, SGI, Sync Research and Viatel.

There were also share split announcements from Actuate, Altera and CDT; a poor IPO from Divine InterVentures (Internet); satisfactory IPOs from Axcelis (semiconductors) and Entegris (materials management); and excellent IPOs from OmniVision Technologies (semiconductor imaging devices), Sunrise Telecom (service verification equipment) and Triton Network Systems (broadband wireless equipment). Additionally, Turkcell made a modest debut on the NYSE, after a strong simultaneous listing in Istanbul.

Locally

Aplitec (+22.6%)
C-Tech (-26.5%)
Casey (+33.3%)
CCH (+34.6%)
Crux (-28.6%)
Dectronic (+40%)
Elexir (+25%)
I-Tech (+25%)
Micrologix (+25%)
SecData (+33.3%)
Y3K (+28.6%)

Internationally

Aspect Comms (-47.8%)
Brooktrout (+36.7%)
CNET (+35.1%)
Exabyte (+44.4%)
Extreme Networks (+40.7%)
MIPS (+38%)
NCDI (+82.2%)
Palm (+46.3%)
Segue Software (+37.9%)

Despite overseas IT and telecoms stocks performing quite well, the local situation is far from healthy.

Of the +/-100 IT/telecoms stocks, over 60% of these are trading below 100c, 45% at below 50c, 15% below 10c, and there have been several liquidations/suspensions already this year. Additionally, over half of these shares are trading below their original listing price. I suggest there is a lot more rationalisation to come, before we see some sanity in the local situation.